Law 532 Exam 1 Ch 10,13,14,15

Default rules related to partnership say that:

-All liabilities are shared equally among the partners -all control is shared equally among the partners

Sharing profits equally makes you co-owners unless profits are shared..

-Because of some rent arrangement -repaying a debt -sale of the goodwill of a business -interest or other charge on a loan -annuity or other benefit -services as an independent contractor or other compensation to an employee

What is required to form a partnership?

1. You must co-own the business 2. There must be at least two owners of the company 3. You have to carry on the business over time, not just conduct a one-off transaction 4. Business must be for profit

Which of the following is a correct statement regarding general partner liability under general partnership law?

A partner's personal assets are subject to partnership debt.

An LLC is created by what state-required filing?

Articles of organization

Which of the following is typically filed with the secretary of state's office when forming a limited partnership?

Certificate of limited partnership

What businesses have liability protection and why?

Corporation or limited liability company, because those are where you separate yourself from your company.

What are the fiduciary duties that partners are legally obligated to eachother?

Duties of accounting, care, confidentiality, disclosure, loyalty, obedience, good faith and fair dealing.

The good blank standard requires partners to exercise appropriate care when conducting partnership business.

Faith

State laws that govern LLCs include provisions for both initial ______ of the LLCs and the default rules in case the owners do not set their own standards of operation.

Formation

A(n) blank partnership is typically defined as an association of two or more people or entities who are co-owners and co-managers of a business and share in the profits of an ongoing business operation.

General

In a limited partnership, what type of partner is typically responsible for filing the information return with taxing authorities?

General

What type of partner is also referred to as a managing principal?

General

Two or more people operating as co-owners of a business for profit is called a:

General Partnership

Which of the following does not require any formal documents to be filed with the government in order to legally exist?

General Partnership

Which of the following does not require a form to be filed with a government agency?

General partnership

Capital

How a business entity funds its operations is referred to as

What legal responsibilities do partners owe each other and why?

Important fiduciary duties, because partners must be able to trust and confide in each other

Liability

In choosing a business entity, principals should consider at least the following:

For tax purposes, a partnership will file a(n)

Information return

A plaintiff taking steps to collect money owed from a defendant pursuant to a court order is known as executing the

Judgement

Which of the following are typically used to denote a limited partnership?

LP

Does being in a partnership protect you from liabilities of the business?

No. Being in a plain old partnership does not protect your personal assets from being taken if the partnership is in trouble.

How many owners does a sole proprietorship have?

One

Do all businesses have liability protection-so the owners aren't held personally responsible if something goes wrong?

Only if you form a business entity that separates yourself from your company.

Which of the following is considered the main disadvantage of the sole proprietorship business formation?

Owner liability

In the context of business organizations, the principals of the business are the

Owners

A general blank is where two or more principals have demonstrated an intent to carry on as co-owners of a business for profit.

Partnership

Principal funding and commercial lenders are viable funding options for a general

Partnership

Which of the following is the simplest multiple-person business entity?

Partnership

Limited and general are the two traditional subcategories of which of the following business entities?

Partnerships

Which of the following is the term used to describe an entity that, for tax purposes, means that the partnership entity pays no level of corporate tax.

Pass through

Limited partnerships are blank blank entities for tax purposes, meaning the entity itself does not pay taxes.

Pass-through

The "limited" in LLC refers to the idea that LLC members are protected from blank liability for any business debt or liability if the venture fails.

Personal

The blank is responsible for the unpaid debts of the sole proprietorship. (Please use one word per blank.)

Principal

Owners of a business are also called ______.

Principals

In the absence of an agreement, which of the following are used as default provisions for a limited partnership?

Revised Uniform Limited Partnership Act

Which of the following have most states adopted to provide default provisions for partnerships where the principals have not expressly agreed otherwise?

Revised Uniform Partnership Act

Which of the following is not a source of funding for partnerships?

Selling ownership rights through the public markets

Which of the following is not a way in which a limited partnership can be funded?

Selling ownership rights through the public markets

Limited partners are sometimes referred to as ______ partners.

Silent

A(n) blank proprietorship accounts for income taxes through the individual owner's personal return.

Sole

Which of the following requires no annual filing?

Sole proprietorship

The following are NOT true of sole proprietorships:

Sole proprietorships are subject to double taxation. Sole proprietorships may not have more than one employee. Sole proprietorships can have more than one owner.

Which of the following is true of sole proprietorships?

Sole proprietorships do not file an entity tax return.

The ULLCA is the model statute used by most ______ to govern LLCs.

States

Liability

The extent to which principals are personally responsible for the debts of the business is which of the following factors?

When the members do not create an operating agreement, the LLC will be governed by what source of law?

The state's LLC statute

Which of the following is true of limited partners in a partnership?.

They remain primarily investors.

True or false: A partnership may not sell ownership rights through the public markets.

True

The model statute used by most states to enact legislation to govern LLCs is the ULLCA or blank Limited Liability Company Act.

Uniform

States that have not adopted the RUPA follow the provisions found in the

Uniform Partnership Act.

What is the uniform partnership act used for?

Used to figure out when two or more people co-own a business

If in a partnership, Margaret makes a really careless decision that puts the company in debt, could Lorenzo sue Margaret for breach of data of care?

Yes

Is a partner in a partnership runs up a bunch of debt for the partnership, will the other partner be responsible for it?

Yes

A limited partnership blank may expand the role of the limited partner, but not to the point of constituting day-to-day involvement of the business.

agreement

Under the RULPA, a general partner may withdraw from a limited partnership so long as all partners agree in writing to continue the partnership and

at least one general partner remains.

The RUPA provides that partners have the power to bind the partnership to blank obligations regardless of the knowledge of the other partners.

contractual

A limited liability company (LLC) offers its principals the same amount of liability protection afforded to principals of a(n) __________.

corporation

A limited liability company (LLC) offers business owners the liability protection of a

corporation and the taxation of a partnership.

Voluntary separation, expulsion, and a partner's incapacity are recognized events under RUPA that are considered to be events of

dissociation

When a principal wishes to leave a partnership, the RUPA defines this act of separation as which of the following:

dissociation

Generally speaking, a general partner may withdraw from a limited partnership at any time without causing blank of the partnership.

dissolution

Sole proprietorships may be terminated by which of the following:

express act of the sole proprietor

Duties requiring partners to act in the best interest of the partnership are known as blank duties.

fiduciary

Executing a judgment can involve steps such as:

garnishing wages lawfully seizing assets

A limited partner will lose his or her limited liability protection for engaging in a negligent or blank act while acting within the scope of partnership duties.

illegal

Parties who may not intend to become partners can still have liability as partners through a(n) blank partnership.

implied

If a limited partner commits an illegal or negligent act on behalf of the limited partnership, the limited partner

is personally liable to pay damages to the injured party.

Which of the following is (are) true about the RULLCA:

it identifies matters that can't be waived by the operating agreement related to LLC and member liability it confirms that the operating agreement can include specific penalties for member noncompliance

If a limited partner engages in activities reserved for general partners, the limited partner may

jeopardize the limited partnership status.

LLCs and LLPs limit the personal blank of business principals, while avoiding the double taxation found in corporations.

liability

In a limited partnership, blank partners are subject to restrictions on withdrawal.

limited

The "LL" in both LLC and LLP stands for:

limited liability

The business form that provides some liability protection for partners in a general partnership is a

limited liability partnership (LLP).

In a limited partnership, the limited partner's liability is

limited to the extent of the limited partner's contribution in the business.

Who operates the business and how the business is operated is a function of

management and operation.

Basic information required by the state to create an LLC typically includes the ______ of the business, its principal location, and the names of its members.

name

Most states will typically require basic information to create an LLC, including the: (Check all that apply.)

name of the business. principal place of business. names of the members.

Unless the parties otherwise agree, the RUPA states that partners providing labor to the partnership are:

not entitled to any compensation other than a share of profits

The state laws that govern LLCs all provide for formation and for the default rules that are

often different from state to state.

The members of an LLC agree on how to operate the business in a(n) blank agreement.

operating

An LLC is governed through its

operating agreement

Management responsibilities and plans for dissolution are included in an LLC's

operating agreement

Death or personal bankruptcy of the owner are examples of how a sole proprietorship is terminated by

operation of law.

An LLC is created by filing articles of blank with the state.

organization

A limited liability blank (LLP) provides general partners protection from LLP debts and other liabilities.

partnership

The abbreviation LLP denotes a limited liability

partnership

In a limited partnership, the general partner is

personally liable for the debts of the partnership.

In a limited partnership, partners share

profit and loss in proportion to their contributions.

When a limited partnership interest is sold to the public, the transaction is subject to federal and state blank laws.

security

When it comes to liability, general partners are personally exposed to liability similar to

sole proprietors

LLCs and LLPs were created to allow business principals to avoid double blank while still providing limited liability.

taxation

A limited partner may not withdraw from a partnership before:

the agreed-upon termination time occurs

The RUPA provides for expulsion of a partner from a partnership by the what kind of vote of the other partners.

unanimous

When a principal desires to leave a limited partnership, the RULPA defines this act of separation as which of the following:

withdrawal